Nikkei leaps on expansion news

CBS.MarketWatch.com

TOKYO (CBS.MW) -- Asian stock markets were mostly higher on Friday, led by further gains in Tokyo where the Nikkei broke new ground for the year on better-than-expected growth data.

The Nikkei Stock Average of 225 issues closed at 17,198.55 points on the Tokyo Stock Exchange Friday, up 95.93 points, or 0.56 percent, from Thursday.

Japan's GDP figures, released late on Thursday, showed its economy grew at a stunning 7.9 percent annual pace in the first three months of the year, a 1.9 percent climb from the previous quarter and breaking a long run of negative growth.

The Nikkei briefly climbed as high as 17,483.38 earlier in the session, above its previous intraday high for the year at 17,300.61.

Hong Kong stocks initially soared on the strong GDP figures but pared early gains. At the morning close the Hang Seng Index was up 1.18 percent, or 152.10 points, at 12,991.31.

China markets were also firmer by midday, extending gains on the back of this week's interest rate cut.

China slashed deposit rates by an average one percentage point and lending rates by an average 0.75 percentage point.

South Korea stocks were off two percent by midafternoon on news that the government may sell its bank shares if the stock market continued to rise.

Australian shares were also lower in afternoon trade but resources index gained about 2.8 percent. In the afternoon, the All Ordinaries index was down 0.88 percent, at 2952.4.

In Southeast Asia, Singapore shares hit their highest levels in over two years with the Straits Times Index up 1.58 percent at 2,062.14 by 0430 GMT.

"The next couple of weeks, the index is going to test 2,150 and could even move towards the 1994 high of 2,180," John Schofield, Prudential-Bache Securities regional technical analyst told Reuters.

European markets Thursday

European bourses ended down Thursday as a U.K. interest rate cut failed to lift spirits in London while fears of a possible rise in U.S. interest rates squelched bulls on the continent and sent U.S. stocks lower.

In the currency markets, the euro rose above the $1.05 mark briefly after NATO Secretary General Javier Solana said NATO's bombing campaign against Yugoslavia was being suspended.

London's FTSE 100 Index closed down 49.70 points at 6,403.30. Earlier, the Bank of England cut the U.K. base interest rate to 5 percent from 5.25 percent. After the BOE cut rates, the index briefly cut its losses to about 32.90, but then succumbed to further selling. For London stocks see most active.

In Frankfurt, the Xetra DAX closed down 49.13 points at 5,201.49. In Paris, the CAC 40 closed down 41.40 points at 4,380.99. See International Indexes.

In London, financial and pharmaceutical stocks were out of favor. The market consensus seems to agree the latest rate cut will be the last for the time being. See full story. With the prospect of a U.S. rate hike thrown in, telecommunications -- seen as the U.K.'s growth stocks -- fell.

In the U.K., analysts say the strength of sterling, which has been hammering U.K. exporters and the manufacturing sector, may have convinced the Bank of England's monetary policy to cut the base rate. The BOE itself said worries that inflation would undershoot their 2.5 percent target, had encouraged their decision.

Europe catches U.S. rate jitters

In Germany and France, the equity markets slipped back after early gains. Analysts said players were refocusing on the possibility of U.S. interest rates going up at the next meeting of the U.S. Federal Reserve's FOMC on June 30.

"The trading range is thin. Every time the market goes up people start selling. We can't go far without looking to the U.S.," said one equity strategist at Deutsche Bank in London.

Earlier investors were still celebrating the rise in Germany's gross domestic product growth reported Tuesday. GDP in Germany grew 0.4 percent in the first quarter, beating expectations and ending the prospect of a technical recession which occurs when there are two consecutive quarters of contraction.

"Everyone had expected Germany to be in a technical recession but it's not," said one Frankfurt-based equity trader at Salomon Smith Barney.

But later Thursday, the release of German jobless data showing a seasonally adjusted rise of 11,000 in May from April, muted immediate hopes of recovery in Europe's biggest economy.

In late New York currency markets, the euro rose 0.1 percent to $1.0477, the dollar shed 0.1 percentto119.05 yen and lost 0.1 percentto 1.8662 deutsche marks. Sterling was up 0.2 percent at $1.6048.See currencies.

For commodities see current commodities prices.

Asian markets Thursday

The Nikkei 225 Stock Average jumped 480.12 points, or 2.89 percent, to close at 17,102.62 Thursday, its highest close since May 6. In Hong Kong, the Hang Seng shed 35.21 points to close at 12,839.21.

Nikkei 225 Stock Average

The benchmark spiked above 17,000 for the first time in a month after a report in the Nihon Keizai Shimbun's afternoon edition reported Japan's GDP grew a real 1.9 percent in the first quarter and an annualized 7.9 percent.

U.S. Markets Thursday

The Dow Jones Industrial Average
DJIA, +0.45%
declined 69.02 points, or 0.6 percent, to close at 10,621.27 Thursday. It was the third setback in a row for the key yardstick. The Nasdaq Composite
$compq
fell 34.73 points, or 1.4 percent, to 2,48462 while the Standard & Poor's 500 Index
SPX, +0.64%
sank 1.2 percent to 1,302.82. See Market Snapshot.

The 30-year Treasury fell 10/32, to yield
TYX, +0.53%
6.051 percent after Japan's GDP showed the economy is growing by 1.9 percent in the first quarter, the first expansion following five straight quarters of declines (See full story) and as inflation fears kept Treasury buyers at bay. The last close above 6.100 percent for bond prices occurred Dec. 9, 1997, when the yield printed 6.132 percent. The dollar's travails and the strength of Japan's first quarter gross domestic product were the main factors behind Thursday's deterioration in sentiment.

Americas' closing prices for Thursday

Brazil's Bovespa jumped 1.83 percent, or 199 points, to close at 1,1089 Thursday amid capital outflows from the country to pay off some debt coming due this month.

Intraday Data provided by SIX Financial Information and subject to terms of use. Historical and current end-of-day data provided by SIX Financial Information. All quotes are in local exchange time. Real-time last sale data for U.S. stock quotes reflect trades reported through Nasdaq only. Intraday data delayed at least 15 minutes or per exchange requirements.